Secure 2.0 Intends to Revamp Retirement Savings:
Here’s how it affects you and the MO Deferred Comp Plan

The Secure 2.0 Act was passed by Congress and signed into law by the President on Thursday, December 29, 2022. The Act was designed to help Americans save more for retirement, so what exactly does that mean for you? Below we highlight a few provisions that will affect both you and the MO Deferred Comp Plan in 2023 and 2024.

First Day of Month Contribution Changes

Effective January 1, 2023

SECURE 2.0 eliminates the “first day of the month” requirement for 457(b) governmental plans, like MO Deferred Comp. If you change your contribution amount, you can expect it to go into effect immediately or as soon as administratively possible by your payroll department.

Increased Required Minimum Distribution Age

Effective January 1, 2023

As of January 1, 2023, the age to start taking required minimum distributions (RMDs) increased from 72 to 73. Here are a few things to keep in mind regarding your current or future RMD:

  • If you turned age 72 in 2022 or earlier, you will need to continue taking RMDs as scheduled.
  • If you're turning age 72 in 2023 and have already scheduled your withdrawal, you can postpone your first RMD until you turn age 73.

Decreased RMD Penalty

Effective January 1, 2023

The IRS penalty for not taking your RMD by the given deadline will decrease from 50% to 25% of the RMD amount. Remember, the MO Deferred Comp Plan automatically sends required minimum distribution payments to participants who qualify.

Withdrawal Penalty Exception for Public Safety Employees Extended

Effective January 1, 2023

The Secure 2.0 Act extended the public safety officer exemption from the 10% early withdrawal penalty to now apply to corrections officers who separate from service in the year they reach age 50 or later and to public safety officers that are separated from employment with at least 25 years of service. These employees may withdraw money from a 401 defined contribution plan account without being subject to a 10% early withdrawal penalty.

As a reminder, any employee who has left state employment can withdraw money from their 457 contributory source funds without incurring the 10% early withdrawal penalty.

No Mandatory RMDs from Roth Accounts

Effective January 1, 2024

Participants will no longer be required to take RMDs from Roth accounts starting in 2024 (except RMDs due by April 1 for those reaching their RMD age in the prior year).

Higher Paid Employees to Contribute to Roth ONLY for Age 50+ Catch-Up

Effective January 1, 2024

Age 50+ Catch-up contributions made by participants who earn $145,000 (indexed for inflation) or more in the prior year must be made on to a designated Roth account.